Saturday, 21 November 2009

Rich Dad's Guide to Investing: Learn Robert Kiyosaki Ways to Invest, Build Assets to Create Wealth

guideRobert Kiyosaki is the most influential person in financial education in the world, he educates people to become multi-millionaires and to be rich. Money working for money is the philosophy of the rich and wealthy and that's how all the greatest wealth has been created. Rich Dad's Guide to Investing is another excellent book regarding this subject and I rated this book five stars at Amazon.

If you have read Rich Dad books you are aware of his famous four cash flow quadrants; Left Quadrant: E: Employees and S: Self Employed; Right Quadrant: B: Business Owners and I: Investors. Robert Kiyosaki says that the right quadrant is the area of wealth where all the wealthiest people are operating from. In order to become truly wealthy it is necessary to create assets, (own businesses) build a system as a business owner and acquire assets ( as investor) with your business.

He says that most investors never get very rich as they invest individually rather than investing as a business. Rich Dad said his business buys assets with pre-tax dollars, while private investors buy assets with after-tax dollars. Rich Dad said we need knowledge and experience to become an insider investor to be able to invest in where the rich invest in which is not available to the middle and poor classes.

When it comes to money and investing you have the following three choices 1) To be secure, 2) To be comfortable 3) To be rich. Rich Dad says that when it comes to money the 90/10 rule applies and this is due to the fact that 90% of people choose comfort and security over being rich. Rich dad said there are only two kinds of money problems; one problem is not enough money. The other problem is too much money, which type of money problem do you want?

Investing is confusing as it is a very large subject and what most people call investing is not really investing. It is very important to write down your financial plan and be clear what you really want in your life and where you are going. If you have a good plan and stick to it, all you need is a little discipline and do not be obsessed with get rich quick schemes. Rich Dad said investing is not risky, being financially uneducated is risky. You need to take control over yourself and need to be financially educated and gain experience to become a successful insider investor.

If you want to be a rich investor you need to learn how to read financial statements. Rich dad said “ The income statement and balance sheet are like a magic carpet”. The best investment opportunities come from understanding accounting, the tax code, business law and corporate law, in these invisible realms where the real investors shop for the biggest investment bargains.

How to Build a Strong Business? According to Rich Dad, the B-I (Business owner and Investor) Triangle is the key to great wealth. This comprises of the mission, the team, leadership, cash flow communications, systems and legal management and product.

robertRich Dad said that product is the least important part of the B-I triangle. I personally disagree with this; if we look at some of the most respected and successful corporations in the world such as Microsoft, Google, Sony, Apple, Samsung, LG, Mercedes, BMW they produce some of the best and most exclusive products in the world.

Rich Dad mentioned about McDonalds hamburgers that we can make better hamburgers than them, but no one is as successful as McDonalds. However, as the founder of McDonalds, Ray Kroc said, his company is in real estate business not the hamburger business. McDonalds and Coca Cola have been successful, but personally I hardly ever eat in McDonalds or drink coke as those foods are associated with junk food that causes obesity and general health problems to the public.

The ultimate investors create assets that are worth billions dollars, people such as Bill Gates and Warren Buffet have made their fortunes in the traditional way like Ford and Rockefeller did. They built companies and sold shares in their companies to the public, they worked hard to become selling shareholders rather than buying shareholders. In other words, by being selling shareholders, they printed (invented) their own money – legally; this is the biggest secret of the ultra rich and the ultimate formula for wealth!

Rich dad believed in giving back and he knew the most important law of money “Give and you shall receive”. He was a generous man who donated his money to churches, his favourite charities and even after his death his foundation has continued to earn and donate money to good causes.

Rich Dad's Guide to Investing concludes that You Do Not Need Money to Make Money! Rich Dad said “ You can choose to live in a world of not enough money or too much money. That choice is up to you.”

There are lots of people in this world who are much richer than Robert Kiyosaki, however not many of them share the secrets of how they became rich or teach you how to create wealth. I gained great information about wealth building for just the cost of this book; this is another wonderful book that I will recommend to my family and friends and I truly respect Robert Kiyosaki's generosity and willingness to share many of his valuable lessons, knowledge and secrets with the world.